Interview on Radio National, Breakfast with Fran Kelly
Fran Kelly: And the breaking news this morning is that Australian coal exports appear, to China that is, appear to have been formally blocked. This comes after months of import restrictions that have thrown the $14 billion export coal industry into turmoil. For some response to this now, I'm joined by Australia's Trade Minister Simon Birmingham, who's about to jump on a flight. Minister, thank you very much for joining us.
Simon Birmingham: Good morning, Fran. Thanks for the opportunity.
Fran Kelly: Has the Australian Government had confirmation of this decision by the Chinese authorities?
Simon Birmingham: No, Fran, we have not. So we see these reports and obviously are, again, deeply troubled by them. They, if true, would indicate discriminatory trade practices being deployed by Chinese authorities. And we would urge them to rule that out swiftly and demonstrate that they are continuing to operate in a manner consistent with the type of market principles they committed to as part of their membership of the World Trade Organization and through their free trade agreements.
Fran Kelly: Well, if true, it's also a massive blow, isn't it, to Australia's export industries? It's a $14 billion industry, the coal. I think it's our third biggest export to China. The report suggests this decision's been- I mean, they look as if they're official, taken by China's National Development and Reform Commission at a meeting of 10 Chinese power plants on Saturday. Are you aware if any of our coal suppliers have had this decision relayed to them?
Simon Birmingham: Not in formal terms that I'm aware of, Fran, but clearly there is a degree of detail in the media reporting that's there. Our coal shipments, as is well known, have been suffering a number of delays in terms of unloading and processing at port. It's important to recognise that coal is an export for which Australia also has significant markets in Japan, Korea and India. It is not quite as heavily reliant on China as some other commodities. But nonetheless, if true, this would be a significant issue in relation to the trading relationship with China once again, and an issue for a number of Australian companies.
Fran Kelly: If true and as you say, it would be a breach of- it would be discriminatory trade practices, what will Australia do about it? What action will or can Australia take to retaliate?
Simon Birmingham: Well we will try to work through the facts first and foremost. And as always, in these matters, we recognise there's a need for calm and for analysis of the detail of these things. But then, of course, then, of course, we would seek to raise our concerns and work through these issues in any way possible with Chinese authorities, first and foremost. We have already raised general concerns about treatment of this products with China and also done so through the World Trade Organization by raising this and other concerns in the trade in goods committee. And of course, we'll continue to explore any other avenues that might be available to us in relation to seeking action from China that would see them better act in accordance with the types of commitments they've made, not only to Australia, but to the rest of the world as well.
Fran Kelly: I mean, Australia has a free trade agreement with China. What value is that to us now? It would seem not much.
Simon Birmingham: Well we certainly have concerns, as I've said, that Chinese do not appear to be acting consistent with either the letter or the spirit of that trade agreement. And that obviously is a deep concern. Our trade agreement has provided huge opportunities for many Australian industries and does continue to do so in many sectors right now, in giving them preferential access in terms of reduced tariffs and other rates into the China market. But clearly, parts of it do not appear to be being lived up to at present. And we've called that out and we do continue to try to have the type of dialogue that that would enable us to work through these types of issues with China. Regrettably, they remain unwilling to come to the table, even as they change position and take these sorts of steps.
Fran Kelly: To no avail, the calling it out would seem. In terms of, you know, trying to have dialogue; when will Australia formally and will Australia formally take action at the WTO? You talked about it in terms of barley, has that decision been made yet? And when will Australia basically hang tough?
Simon Birmingham: So, we are very, very close in terms of finalising on the matter of barley, that is essentially the most imminent due to the nature of the actions that China has taken there in finalising the anti-dumping case in which we dispute the evidence that their views and the findings that they've made. So we are well prepared in terms of the analysis we have undertaken to mount that case and in terms of finalising the consultation with Australian industry to move forward with them in mounting it.
Fran Kelly: It is the reality that no Australian exporter, no Australian business in China can be complacent, can feel safe, actually?
Simon Birmingham: The reality, Fran, is certainty that the risk profile of trading with China has grown significantly during the course of this year, and that is something I would expect that not only Australian businesses would have noted, that businesses right around the world would see this. It's not the first time that China has applied trade sanctions to other countries for reasons that appear to be linked to other motivations. And so that does increase, for all businesses, the risk and therefore, will no doubt have them looking in terms of their investment and other decisions at that market with greater scepticism.
Fran Kelly: What about iron ore? China's reliant on our iron ore at the moment; it's propping up our economy. It's about to give a big boost to the mid-year economic forecast, we understand. But how concerned are you and are you talking to our iron ore exporters about the possibility of our iron ore also coping it?
Simon Birmingham: We're always in touch with Minerals Council and various businesses and key exporters and, of course, continue to carefully monitor these things. There has been quite a surge and spike in demand for iron ore. We always take a conservative approach to these things. So, yes, we have, in terms of the pricing and volumes forecast, been cautious and careful about that, not just in the last budget, but in many financial statements. And no doubt we will remain so looking forward.
Fran Kelly: Because there are reports today that China is calling in, the big iron ore producers. It's calling in Rio, it's calling BHP, so it's not happy. I know you've got to jump on a plane, but there were reports on the weekend that the Five Eyes countries were looking at ways of supporting Australia against these actions from China. How advanced are those plans? Can you tell us anything about them?
Simon Birmingham: Fran, look, we always look forward to engagement with all trading and industry partners wherever we possibly can. And we will work with all of our different trading partners right around the world.
Fran Kelly: Minister, you can't get China on the phone. Is there anything else you can do? Oh is that your plane?
Simon Birmingham: That is me hopping on the plane, Fran.
Fran Kelly: You get on the plane, Minister. Thank you very much for your time.
Simon Birmingham: Thank you. Cheers.
Fran Kelly: Simon Birmingham, Australia's Trade Minister and Tourism Minister, and Finance Minister.
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